They believed so strongly that when one degree was not enough to pay off the debt, millions of extra debts went on for more degrees. Reasonable people made decisions based on the information available at the time and all information from trusted sources pointed to ‘borrowing’.
If you didn’t want to borrow, college costs limited your practical choices. You could go to community college, join the military, be born into a wealthy family, or not go to school at all. Regardless of your personal feelings about any of those choices, there were many social norms about their relative worth. We look down on community college education as unsuitable for the kind of high-paying, white-collar work that comes with prestige in our economy. And, in case you haven’t noticed, the United States has been embroiled in military conflict somewhere in the world for much of its life. That left two choices, only one of which was practical: not go to college at all. But the incentives to go are too numerous to make this a good choice for most people. That created a perverse set of incentives.
You can be forgiven for not knowing the chorus “go to college” would have a dark side. But we must not forgive those who knew better. Policy makers knew in the 2010s that the train was derailing. For-profit colleges preyed on women like those who might have ended up at Bennett College. As sociologist Louise Seamster told me on “The Ezra Klein Show,” they knew black debtors would probably never earn enough to pay off their student debt. They knew that poor immigrants and first-generation black and Hispanic students turned to their elderly parents and grandparents to sign up for loans. We knew that as a result, Social Security checks would be garnished, thrusting thousands of elderly people into the poverty that the program was supposed to prevent.
We knew that some people had six-figure debt for luxury law firms or medical jobs, but those with more than $200,000 in debt made up 2 percent of all borrowers. We knew we had encouraged bad actors in the student loan service market. We knew that student loans were the most expensive for the families with the most to lose. And we continued to offer the loans with the same cheerful promise: it’s worth it.
It’s a shame when you get scammed by a friend. When your country is scamming you, it is a fraud.
Those who warn to go “small and slow” with debt forgiveness — whether they didn’t rely on student loans because they were wealthy or went to college when one could pay tuition by working part-time jobs — are like those who are higher up. education policies make them suspicious of forgiveness because it smacks of government handouts. Their impulse is to tinker with the edges of the quicksand and drown many of their core constituents. Or, at their most generous, they’ll consider paltry debt forgiveness with a means test.
Resource testing is one way to measure merit and it is the wrong ax for this woodpile. First, it is a bureaucratic mess, if at all possible. The IRS and the Department of Education seem unable to coordinate in income verification to qualify those who pass the income test. There is also the issue of income testing which works regressively. The social sciences have shown that income testing is a roadblock for those most in need of help. If you want to help the working class people who are in debt, make it easy to cancel.
The income test is also simply the wrong solution for this problem. The student loan debt crisis we’ve created is a recent invention. We don’t forgive the guilt because it makes us feel bad. We forgive this debt because, as intended, it negates the value of education. This debt crisis is the result of a series of foreseeable market forces and policy decisions. Any student who went into debt under those conditions did so under circumstances that made it impossible to make better choices. No one, not even college graduates who are now making a lot of money, deserved opportunities as bad as the ones we created.